“The truth is there is always enough gold, it is simply a matter of price”
Gold is a commodity. Its primary use is ornamental and sentimental, with some smaller use in electronics.
It is THAT value apon which the value of gold is based. Because people want it for uses OTHER than a value store.
If you artificially inflate the price of gold because you say “this is money, I call this money now” - that is no different from saying of a paper note “this is money, I call this money now”.
MUCH more rational than a gold standard would be a “basket of commodities” standard, where gold is but one commodity to back a currency.
I once had all my money in gold. It removes all your good logic to have all your money in one thing.
I’ve felt for years that Richard Nixon’s greatest sin, hands down, no contest.....was taking us off of the gold standard.
I feel that even more today. I also am equally convinced that Bernanke is an absolute idiot.
This will make a nice rhetorical discussion of change that absolutely will not occur in our lifetimes.
The information in this link is very interesting...includes a chart (published in Barron’s)on paper dollar inflation 1945 to 2011 http://fisherpreciousmetals.com/2010/11/53957-in-circulation-for-every-ounce-of-gold/
*The close cousin of which is the fallacy that the money supply must continually be increased to match expanding production.Thread readers, please note my tag. Tied directly to this subject.**In reality fractional reserve banking is not compatible with a true fixed gold standard. True monetary reform and discipline would require a full reserve banking model – another massive limitation on the power and profits of bankers.
I agree with Bernanke. You can’t dispel his comment simply by saying that there is always enough money, it’s just a question of price. If going to the gold standard would result in a price per ounce of $1 million, then you are talking about massive dislocation of the economy in order to get there.
Ben Bernanke was not appointed by Obama. Thanks Bush.
He can understand the logic behind fractional reserve banking but can’t understand a gold standard? That’s whacked.
Those who firmly support gold should also back the creation of scrip currencies to maintain the value of their gold. Scrip is a tightly controlled alternative or complementary currency that is not legal tender. As such, value of scrip is fixed, and prices of goods purchased with scrip are fixed, even if the dollar is vacillating wildly.
So, in effect, if the price of a loaf of bread is 1 scrip denomination, even if a dollar hyperinflates so that a loaf of bread costs a billion dollars, it still only costs 1 scrip denomination.
Imagine an ounce of gold in that situation. Say its price is fixed at 1000 scrip denomination. You might need a semi-truck to haul all the 100 million dollar bills to buy an ounce of gold. Or everyone on the scrip system will be able to make change for your ounce of gold, if they have the appropriate fraction of 1000 scrip denomination.
The same exchange rate it was the day before and the day after. It doesn’t matter what the dollar does.
Thus it has a huge stabilizing effect on markets, and maintains the value of both goods and items of value, like gold.
I think we should go back to the sea shell standard!